# Our nation's economic woes **URL:** \ **Category:** Great Debates\ **Created:** [May 29, 2008, 2:14pm UTC](https://boards.straightdope.com/t/our-nations-economic-woes/451010 "2008-05-29T14:14:17Z")\ **Posts on this page:** 20\ **Page:** 3
**Author:** ![Sam\_Stone](https://avatars.discourse-cdn.com/v4/letter/s/ecccb3/32.png) [@Sam\_Stone](https://boards.straightdope.com/u/Sam_Stone)\ **Post date:** [June 1, 2008, 11:36pm UTC](https://boards.straightdope.com/t/our-nations-economic-woes/451010/41 "2008-06-01T23:36:21Z")
Gonzo, you’ve got to stop doing this. That cite you just posted shows that industrial output is slowing _because the economy as a whole is slowing_. This is a short-term cyclical slowing, which you get on the leading edge of an economic downturn every time there is one. Industrial output slows, then eventually demand starts to increase again, productivity increases, and industrial output increases again. That’s part of the business cycle. You were already given cites in your other thread showing that there is no long-term trend of industry leaving the U.S. You chose to ignore it and drop your misleading cites in yet another thread. Also, you keep posting cites to slowdowns and retrenchments in specific industries, while ignoring the bigger picture. There’s no doubt that the U.S. is making fewer cars today than it did ten years ago. On the hand, it’s making far more computers than it did ten years ago. Economies evolve. Inefficient industries shrink, and new ones grow to take their place. You keep posting cite after cite of specific industries that have shrunk, while ignoring all the ones that are growing. It’s very misleading. ---
**Author:** ![Sam\_Stone](https://avatars.discourse-cdn.com/v4/letter/s/ecccb3/32.png) [@Sam\_Stone](https://boards.straightdope.com/u/Sam_Stone)\ **Post date:** [June 1, 2008, 11:46pm UTC](https://boards.straightdope.com/t/our-nations-economic-woes/451010/42 "2008-06-01T23:46:25Z")
**BrainGlutton:** You do realize that the ‘stimulus’ they’re talking about involves borrowing the money, right? So you’re in favor of increasing the deficit by 140 billion dollars? One of the risks the U.S. economy is facing is the degrading value of the U.S. dollar, and the subsequent rise in interest rates that might be required to protect it. Just what do you think borrowing 140 billion will do to the value of the dollar? What might the double whammy of a devaluing dollar and injecting more capital into the market do to interest rates? This is pure Keynesianism. Borrow in recessions, pay it back in the good times. Unfortunately, the ‘good times’ never seem to come. In the meantime, jobs that are created through a one-time injection of cash into the system are not stable, and doing this at a time when unemployment is very low threatens to cause wage inflation which is the last thing you want going into a recession. Your 1.4 million new jobs could wind up costing at least as many in other industries. In the end, all you’ve done is inject a lot of noise in the economy, created a lot of unsustainable consumer spending, and hurt the long-term structural soundness of the economy. In addition, the other problem with government stimulus packages is that they often arrive too late - recessions rarely last more than a couple of quarters, so by the time you realize you’re in one, get the government to pass a program, send out the cheques, and then have the cheques get spent, you’re often already out of the woods. Then all that money does is prime an economy that is already growing again, leading to even worse booms and busts (the ‘signal’ of the stimulus winds up in phase with the economy, instead of out of phase). This may have happened in 2001, when Bush passed the huge stimulus package which included all his tax cuts. Looking back, it was clear that by the time the cuts became effective the economy was already growing fast. This may well have exacerbated the real estate bubble and even the energy price runups we’re seeing. By the way, this plan sounds awfully close to Bush’s one-time tax refund cheques. Were you in favor of those? ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [June 1, 2008, 11:48pm UTC](https://boards.straightdope.com/t/our-nations-economic-woes/451010/43 "2008-06-01T23:48:03Z")
[QUOTE=John Mace] No. There are some economists. But they call them all economists, and many are not. [/quote] :rolleyes: No, they do **not** call them all economists. Look again. ---
**Author:** ![focusonz](https://avatars.discourse-cdn.com/v4/letter/f/9dc877/32.png) [@focusonz](https://boards.straightdope.com/u/focusonz)\ **Post date:** [June 2, 2008, 2:21am UTC](https://boards.straightdope.com/t/our-nations-economic-woes/451010/44 "2008-06-02T02:21:32Z")
[QUOTE=sweeteviljesus] Among our nation’s economic woes I include, our rising national debt, constant deficit spending, our trade deficit and and rising transportation fuel costs. To those of you who know what they are talking about, how would you triage them and what would you do about them if you were Benevolent Dictator for Life? What would you promote if you were running for President? [/QUOTE] I would not triage the woes as you don’t triage the symptom, you triage the patients, the voters and the candidates! Look at the % of those that would abstain, are disillusioned by the alternative choice! These patients are to be operated on first! > [@](#): > > As of 4/28 on SDMB threads > > Hillary voters: will you choose Obama or McCain > [http://boards.straightdope.com/sdmb/showthread.php?t=465177&highlight=voters](http://boards.straightdope.com/sdmb/showthread.php?t=465177&highlight=voters) > > McCain – 4 (23%) because Issues and Experience! > Abstain – 1 (5%) > Obama – 12 (70%) because Oh Well, with hope! > Total – 17 (of 52 post) > > Obama voters: will you choose Hillary or McCain > [http://boards.straightdope.com/sdmb/showthread.php?t=465219&highlight=voters](http://boards.straightdope.com/sdmb/showthread.php?t=465219&highlight=voters) > > McCain – 14 (17%) because Any day of the week over Hillary! > Abstain – 22 (26%) > Hillary – 40 (48%) because I can hold my nose! > Undecided – 2 (2%) > Denial – 4 (5%) > total - 82 (of 157 posts) All the woes point to spending excesses by government, Elect the candidate that has called for the lowest spending hikes. > [@](#): > > Here’s the data from [“The National Taxpayer Union”](http://www.ntu.org/misc_items/rating/VS_2006.pdf) > > NTU believes a score qualifying for a grade of “A” indicates the Member is one of the strongest supporters of responsible tax and spending policies. > > A score significantly below average qualifies for a grade of “F.” This failing grade places the Member into the “Big Spender” category. > > **Obama** scored an **‘F’** a 16% rating > > While **McCain** scored **‘A’** a 88% rating. > [@](#): > > The National Taxpayers Union Foundation’s (NTUF’s) candidate cost analysis project show that their federal budget proposals are racing ahead as well. According to neutral data, **Obama’s** platform would boost yearly federal **spending by $307.3 billion** , 36% higher the \*\*Clintons, $226.1 billion \*\* > > The GOP candidate **John McCain** called for **spending hikes of $6.9 billion**. Dated March 3, 2008 [Page Not Found - Search - National Taxpayers Union](http://www.ntu.org/main/press.php?PressID=995&org_name=NTUF) > [@](#): > > Now I have annotated the list with my opinion of how McCain should finance the things on “The American Families Agenda”. See [http://www.johnmccain.com/Informing/Issues/4dbd2cc7-890e-47f1-882f-b8fc4cfecc78.htm](http://www.johnmccain.com/Informing/Issues/4dbd2cc7-890e-47f1-882f-b8fc4cfecc78.htm). > > **Budget negative** means either increased revenues, (read my lips no new taxes) or reduced costs. > > - Lower gas prices and energy costs – McCain getting elected will reduce gas prices. History is repeating itself with this election. See [File:Oil Prices Since 1861.svg - Wikipedia](http://en.wikipedia.org/wiki/Image:Oil_Prices_1861_2007.svg) Gas prices spiked before the 1976 elections and again in the middle of Carters term. Then as soon as Reagan was elected the gas prices came down. **budget minus** > > - Provide for a family-friendly work week – Any one of the legislative ideas here [http://www.womensenews.org/article.cfm/dyn/aid/792/context/archive](http://www.womensenews.org/article.cfm/dyn/aid/792/context/archive) would not cost the government and would have little effect on price of doing business as the management of the responsibility to provide for a family-friendly work week is placed on the employer, **budget neutral** > > - Grow our small businesses – Additional Tax revenues recoup the cost of incentives, **budget negative** > > \*Allow workers to take their benefits with them when they change jobs – Small regulation of the insurance companies is needed. **budget neutral** > > \*Take care of our parents and grandparents – Is obvious that all should respect our elders. Legislation, **TBD** > > \*Assure health care for all – Assure early detection and diagnosis. When the number of patients requiring extraordinary procedures is significantly reduced then health insurance costs are significantly reduced and will be within reach of most peoples budget. **Budget positive.** > > \*Make prevention a national priority – Devise legislation for mandatory exercise in the workplace is required in conjunction with family-friendly work week, **budget neutral** > > \*Crackdown on child predators and gangs – Is obvious legislation, **budget neutral** > > \*Provide health care for our neediest children – The Missouri MC+ is a model seems to work and probably could be tweaked, legislation \*\*TBD \*\* > > \*Reduce the costs and burden of college tuition – Full tax credit with maintained GPA of 2.5 (my idea). **Budget positive.** > > \*Ensure every child in America can read and write - Local funding of NCLB, **budget neutral** > > \*Increase local control – You bet, \*\*budget negative > \*\* > Ensure our schools perform for our children – Local oversight of NCLB, **budget neutral** > > \*Take care of our troops, veterans and their families – For a job well done, **Budget positive** > > \*Win the war on terror – Reduce troop strength in Europe to 60,000 by 2015 from 100,000 in 2006, eliminate 14,500 civilian slots in Europe. See [http://www.stripes.com/article.asp?section=104&article=54317&archive=true](http://www.stripes.com/article.asp?section=104&article=54317&archive=true). This reduces costs but necessary wars and occupations are costly, **Budget positive** > > \*Secure our borders – More debate regarding a national policy is necessary. Certain States are taking steps to restrict employment and benefits of illegal immigrants and maybe the best near term solution, **budget neutral** > > I have worked in the government before. I would add one item to the list. > \*\*\*\*\*Reduce the budget of every agency of the federal government by 10% every 5 years forcing those agencies to review their priorities and refocus on their most essential missions. \*\*I would Promote and Support the ‘Fair Tax’! \*\* The ‘Fair Tax’ forces the taxpayers to consider the impact of their purchasing decision at the time of purchase. They can elect to purchase the product at a price which includes the tax or save the money and the tax by not purchasing. The taxpayer than has an incentive to control the trade deficit. The taxpayer sees immediately the tax of new government spending programs. Also The “Fair Tax” (my biggies are bolded) > [@](#): > > Eliminates all federal taxes based on income including: individual income tax, corporate tax, capital gains tax, payroll tax (Social Security & Medicare), self-employment tax, alternative minimum tax (AMT), estate tax and gift tax. > > Allows you to keep your whole paycheck. > > Savings will increase. > > The U.S. will become the largest tax haven in the world because of the 0% tax on income. This will make the U.S. the most attractive place for foreigners to invest. > > $11 trillion in American overseas “hidden” money will likely be returned to the U.S. > With the increased savings, foreign investment and $11 trillion in American overseas money pumped into the banking system, interest rates will drop 22-25%. > > Lower interest rates will create a housing and retail boom. > > Lower interest rates and increased foreign investment will bring factories and manufacturing back home to the U.S. creating more jobs and higher wages. > > The economy will grow 10% in the first year the FairTax is implemented. > > \*\*With the removal of corporate tax, payroll tax, and compliance costs, hidden in the price of all goods and services, prices will drop 12-25% on everything. \*\* > > U.S. exports will be more competitive in the foreign market with the removal of hidden corporate taxes, payroll taxes, and compliance cost compounded in the price of our exports. > > The $250-$500 billion we spend every year complying to the tax code will be saved and put into the economy instead. > > The 5.8 billion hours spent every year complying with the tax code will be saved and put to more productive uses. > \*\* > Allows families to save more for home ownership, education, and retirement. \*\* > > Ensures that all Americans pay their fair share of taxes. > > Protects everyone, especially the poor, with a rebate to ensure no one pays taxes on basic necessities. > > Makes taxes paid visible to all. The FairTax will be printed on every receipt for every purchase. > > It’s simple. No filing and saving receipts. Only pay a simple sales tax. > > Treats all taxpayers fairly. No loopholes or special treatment. > > $1 trillion in un-taxed illegal activity in the black market will be taxed. > > \*\*Illegal aliens will have to pay the tax. \*\* > > 40 million visitors a year to the U.S. will pay the tax. > > Individuals have more control and choice. People can make choices about how much to pay in taxes by deciding when to buy and what to buy. > > Makes taxation of income unconstitutional by repealing the 16th Amendment (the amendment to the Constitution that allows the taxing of income). > > [http://www.fairtax.net/benefits.htm](http://www.fairtax.net/benefits.htm) **Basically the ‘Fair Tax’ empowers the masses to make individual choices that are in their best interest.** ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [June 2, 2008, 5:22am UTC](https://boards.straightdope.com/t/our-nations-economic-woes/451010/45 "2008-06-02T05:22:05Z")
[QUOTE=focusonz] All the woes point to spending excesses by government, Elect the candidate that has called for the lowest spending hikes. [/quote] No, the woes point to revenue not matching spending. Say for a moment that the war in Iraq was worthwhile. The way to fund it would be to raise taxes at least somewhat, since the American people should be willing to pay for their own defense. That this hasn’t happened shows that either the Administration doesn’t think the war is vital, and thus willing to support by arguing for a tax increase, or have no grasp of economics. > [@](#): > > The ‘Fair Tax’ forces the taxpayers to consider the impact of their purchasing decision at the time of purchase. They can elect to purchase the product at a price which includes the tax or save the money and the tax by not purchasing. > > The taxpayer than has an incentive to control the trade deficit. > The taxpayer sees immediately the tax of new government spending programs. Sales taxes are like this, right? (Though not fair.) Has a state sales tax ever caused the reduction of a trade deficit or decrease in state spending? We’ve gone over why the “fair” tax is a terrible idea often enough, and I won’t repeat those arguments. ---
**Author:** ![The\_Controvert](https://avatars.discourse-cdn.com/v4/letter/t/dec6dc/32.png) [@The\_Controvert](https://boards.straightdope.com/u/The_Controvert)\ **Post date:** [June 2, 2008, 6:32am UTC](https://boards.straightdope.com/t/our-nations-economic-woes/451010/46 "2008-06-02T06:32:06Z")
[QUOTE=Voyager] No, the woes point to revenue not matching spending. Say for a moment that the war in Iraq was worthwhile. The way to fund it would be to raise taxes at least somewhat, since the American people should be willing to pay for their own defense. That this hasn’t happened shows that either the Administration doesn’t think the war is vital, and thus willing to support by arguing for a tax increase, or have no grasp of economics. [/QUOTE] I like the way you think. In fact, let’s start with our own government leaders. If Bush and Cheney believe the war in Iraq is vital, they shouldn’t complain about personally paying for it, right? So let’s immediately freeze the Bushco assets and seize a fair amount as “contributions” to the war effort. Bush should be willing to personally pay for his war. I think if we make him contribute 95% of his assets, that would show an adequate commitment to national defense. ---
**Author:** ![XT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/xt/32/456_2.png) [@XT](https://boards.straightdope.com/u/XT)\ **Post date:** [June 2, 2008, 6:46am UTC](https://boards.straightdope.com/t/our-nations-economic-woes/451010/47 "2008-06-02T06:46:23Z")
Are you serious…or is this a whoosh? On the assumption you are serious: [QUOTE=The Controvert] If Bush and Cheney believe the war in Iraq is vital, they shouldn’t complain about personally paying for it, right? [/QUOTE] Congress authorized the war at the time…should they pay to? Don’t the citizens of the country have some responsibility seeing as how they elected both Congress and Bush to represent us? Because the war is unpopular now and in rhetrospect most people think it’s a mistake doesn’t mean that we (collectively) have no responsibility…or that Bush has ALL the responsibility. Besides, from a practical perspective I seriously doubt Bush et al have the funds necessary to keep the war going for more than a day. Now you may think…‘hey! that’s a GOOD thing’. But thinking it through would show that it would probably not be such a good idea to have our army in Iraq suddenly run out of funds and have to scrounge for food and rides back to the US. [QUOTE=The Controvert] I think if we make him contribute 95% of his assets, that would show an adequate commitment to national defense [/QUOTE] That would be no more right than making everyone who voted for Bush and every member of Congress who voted for war pay 95% of their assets because it was stupid for us to invade. Should Clinton have to pay 95% of his assets for our Bosnia adventure? Perhaps the heirs of Johnson and Kennedy should have to pay 95% of their assets for our Vietnam adventure? If Obama is elected and has to send troops somewhere in the world should he have to give up 95% of his assets if it becomes unpopular? I will assume you were talking tongue in cheek, and if so, and if we were sitting down drinking a few beers I’d agree with you whole heartedly (and while we are at it I think Bush and Chaney should be tarred and feathered and run out of DC on a rail to boot! 😉 )…but in case you were actually serious I figured I’d give my two cents on it… -XT ---
**Author:** ![focusonz](https://avatars.discourse-cdn.com/v4/letter/f/9dc877/32.png) [@focusonz](https://boards.straightdope.com/u/focusonz)\ **Post date:** [June 2, 2008, 12:32pm UTC](https://boards.straightdope.com/t/our-nations-economic-woes/451010/48 "2008-06-02T12:32:05Z")
[QUOTE=Voyager] No, the woes point to revenue not matching spending. Say for a moment that the war in Iraq was worthwhile. The way to fund it would be to raise taxes at least somewhat, since the American people should be willing to pay for their own defense. That this hasn’t happened shows that either the Administration doesn’t think the war is vital, and thus willing to support by arguing for a tax increase, or have no grasp of economics. [/QUOTE] It shows no such thing! The world feels obtaining stability in the region is enough of a worthwhile endeavor to loan money. [QUOTE=Voyager] Sales taxes are like this, right? (Though not fair.) Has a state sales tax ever caused the reduction of a trade deficit or decrease in state spending? . [/QUOTE] Yes, every day and twice on Sunday! Shortfalls in state tax revenue always cause a reduction in state spending by fiscally responsible states. States in general focus on expanding foreign trade to increase jobs in the state and thus state taxes needed to fund these job creation programs go to reduce the trade deficit. The woes are caused by an out of control and an way too powerful federal government. Our rising national debt is due to people like Obama and Hillary and you! > [@](#): > > Here’s the data from [“The National Taxpayer Union”](http://www.ntu.org/misc_items/rating/VS_2006.pdf) > \*\*Obama scored an ‘F’ a 16% rating and taxes and spends irresponsibly \*\* > While McCain scored ‘A’ a 88% rating. Our trade deficit is due to, too low of price including taxes on imported goods. Rising transportation fuel costs are due to inward looking budget busting federal Laws and programs. The State of Alaska has no problem with drilling in ANWR. The gulf states have no problem with building more refineries. The Red states have no problem with nuclear power and wind generation. Your selfish and uninformed and irresponsible ‘Blue’ power has placed crippling limits on what the states can do to ameliorate the nation’s economic woes. ---
**Author:** ![John\_Mace](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/john_mace/32/185_2.png) [@John\_Mace](https://boards.straightdope.com/u/John_Mace)\ **Post date:** [June 2, 2008, 3:41pm UTC](https://boards.straightdope.com/t/our-nations-economic-woes/451010/49 "2008-06-02T15:41:37Z")
[QUOTE=BrainGlutton] :rolleyes: No, they do **not** call them all economists. Look again. [/QUOTE] You can roll eyes all you want, but you’re fucking wrong. Go to your fucking site. It has a fucking tab that says “select an economist”. The first fucking guy on the list is a fucking sociologist. Here are his fucking credentials: > [@](#): > > ALGERNON AUSTIN > Director of the Race, Ethnicity, and the Economy program > > Areas of Expertise > Race, ethnicity, and the economy • Discrimination • Education • Public opinion > > Biography > Algernon Austin is a sociologist of racial relations with a specialization on black Americans. Prior to joining the Economic Policy Institute, he was assistant director of research at the Foundation Center and a Senior Fellow at the Demos think tank. From 2001 to 2005, he served on the faculty of Wesleyan University. Austin is the author of Getting It Wrong: How Black Public Intellectuals Are Failing Black America and Achieving Blackness: Race, Black Nationalism, and Afrocentrism in the Twentieth Century. He has published scholarly articles in Ethnic and Racial Studies, Qualitative Sociology, the Journal of African American Studies, and Race, Gender and Class. > > Education > Ph.D. Sociology, Northwestern University (2001) > M.A. Sociology, Northwestern University (1995) > B.A. Sociology, Wesleyan University (1990) So stop with the fucking rolleyes and _sighs_. ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [June 2, 2008, 4:25pm UTC](https://boards.straightdope.com/t/our-nations-economic-woes/451010/50 "2008-06-02T16:25:19Z")
[QUOTE=Sam Stone] **BrainGlutton:** You do realize that the ‘stimulus’ they’re talking about involves borrowing the money, right? So you’re in favor of increasing the deficit by 140 billion dollars? [/quote] The [proposal](http://www.epi.org/content.cfm/bp210) states: > [@](#): > > 1. _A stimulus package should raise current deficits but not affect the long-term budget outlook._ The purpose of any good stimulus package is to boost immediate job growth. For this purpose we need one-time measures that, if the recession deepens, can be extended as necessary. Permanent, ongoing measures that will affect the budget two or three years from now are, in most cases, inappropriate.7 Simply put, any stimulus proposal involving tax cuts and “pump-priming” expenditures must employ one-time, temporary measures. On the other hand, a deficit-neutral stimulus package is an oxymoron: if the plan does not raise the near-term fiscal deficit, then it has not expanded net expenditures in the economy and will not lead to new jobs. > > \ > > Stimulus and the Deficit > > Fiscal stimulus inherently involves additional federal expenditures and temporary tax reductions that will increase the short-term fiscal deficit. These efforts increase the total demand for goods and services, thereby increasing economic activity and jobs in a period in which we have rising unemployment and excess production capacity. If either the temporary tax cuts or spending efforts are offset by tax increases or spending reductions, then the stimulus package will be ineffective in raising total demand because the offsets take away with one hand what the stimulus provided with the other. Therefore, a stimulus plan that is “deficit-neutral” in this year makes no sense. It is possible, however, to consider a plan that is “deficit-neutral” over a five-year or longer period. [QUOTE=Sam Stone] One of the risks the U.S. economy is facing is the degrading value of the U.S. dollar, and the subsequent rise in interest rates that might be required to protect it. Just what do you think borrowing 140 billion will do to the value of the dollar? What might the double whammy of a devaluing dollar and injecting more capital into the market do to interest rates? [/quote] Monetary policy is addressed: > [@](#): > > **Monetary policy will not be enough** > > Many economists typically believe that recessions can be better fought by the Federal Reserve. With the ability to quickly influence short-term interest rates, the Federal Reserve has a powerful lever to influence the economy and fight recessions. The current economic situation clearly calls for the Federal Reserve to aggressively lean against the current downturn. > > However, there are several reasons to believe that monetary policy, while necessary, would not be sufficient to stimulate the economy under current circumstances. First, turmoil in the credit market makes it less likely that interest rate changes will lead to additional investments through traditional channels. Lenders are facing a crisis of confidence da-- in both borrowers as well as in the reliability of asset valuations?and are wary of lending.16 Furthermore, housing prices may still have a long way to fall, so any boost coming from renewed demand for housing in the face of interest rate cuts will be muted. While a rate cut would still likely be beneficial, it is unlikely to have the same stimulative impact as in the past. > > Furthermore, changes in monetary policy, once enacted, will take around a year to fully benefit the economy. Hence, while the Fed should continue to reduce interest rates, we cannot look only to monetary policy to provide the stimulus the economy needs today. > > Finally, rising prices – especially for food and energy – and worries about acceleration of inflation may place additional constraints on monetary policy. Charles Plosser, president of the Federal Reserve Bank of Philadelphia, recently was quoted as saying, "I am concerned that developments on the inflation front will make the Fed’s policy decisions more difficult in 2008."17 Furthermore, risks of a disorderly decline in the value of the dollar might place further restrictions on the Fed’s willingness to reduce rates (or sustain low rates) during a recession. [QUOTE=Sam Stone] This is pure Keynesianism. [/quote] Keynesian economics has never been discredited, though some Dopers seem to take that as an established fact for some reason. [QUOTE=Sam Stone] In the meantime, jobs that are created through a one-time injection of cash into the system are not stable . . . [/quote] Perhaps not, but they have force-multiplier effects. > [@](#): > > 1. _A stimulus package should generate growth and jobs to offset rising unemployment._ The point of stimulus is to increase economic growth and thereby generate more jobs. The reason that employment growth is slowing and unemployment is rising (and will continue to do so) is that there is a shortage of demand for goods and services: we will have the capacity to produce much more than we will be consuming, and what is missing are customers able and confident enough to make expenditures. > > The two feasible ways to boost demand are to increase consumer spending (for example through tax or monetary policy) or to increase government spending (at the federal, state, or local level). Any stimulus aimed at spurring more business investment will not be effective at this point, because business investment will remain sluggish until consumer and government demand picks up. For example, a recent study estimated that business investment write-offs and the dividend-capital gain tax reductions included in Bush’s tax packages had a small "bang-for-the-buck."6 Without a rise in consumer demand, corporate tax relief and other business investment incentives will not be effective in stimulating growth. > > Government spending is more effective than tax cuts in stimulating domestic demand for two reasons: a portion of the tax cut will be saved rather than spent immediately, and consumers are more likely than the government to spend on imports (rather than domestically produced goods). Approximately 10 cents per dollar of consumer expenditures will be spent abroad, while virtually every penny of investments in public infrastructure will be spent domestically. Especially problematic would be more tax cuts directed at the wealthy, which would not be as effective as tax cuts directed at the low- and middle-income households who would spend (rather than save) a larger share of any extra income. [QUOTE=Sam Stone] In addition, the other problem with government stimulus packages is that they often arrive too late . . . [/quote] This proposal takes that into account: > [@](#): > > 1. _A stimulus package should take effect quickly._ The most frequently cited potential downside of stimulating demand through government spending is a concern that the spending will not yield economic activity quickly because of bureaucratic delay. A smart stimulus – such as the one proposed here – would have its impact within the next year. Ideally, an effective package would have some components that have immediate effect and others that might have impact in six months to a year, thus ensuring a solid foundation for the recovery. Without a stimulus, unemployment – now at 5.0%, half a percent higher than in the spring of 2007 – would likely rise throughout 2008, reaching around 5.5% by July, and 6.0% by the end of the year. [QUOTE=Sam Stone] By the way, this plan sounds awfully close to Bush’s one-time tax refund cheques. [/QUOTE] Not at all. > [@](#): > > 1. _A stimulus package should target unmet needs._ Another goal of any good stimulus plan should be to meet, where possible, unmet social needs. For instance, it is widely acknowledged that there is a huge backlog of necessary school and bridge repairs and new construction projects. A temporary spending increase for such infrastructure would be doubly beneficial in that it would meet the other criteria listed above but also address an acknowledged, pre-existing need. Other examples could include funding needed sewage-treatment plant construction or making public facilities energy efficient. There are specific proposals for short-term federal spending on increased unemployment benefits (sound economic reasons are given for that), environmental infrastructure projects (many local water treatment facilities are not up to the job of providing clean drinking water), public-school repair and maintenance, and transportation infrastructure (no bold new programs like passenger rail, just repairing our long-neglected bridges, etc.). All wise and necessary investments in the future. Even the unemployment benefits. ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [June 2, 2008, 4:38pm UTC](https://boards.straightdope.com/t/our-nations-economic-woes/451010/51 "2008-06-02T16:38:13Z")
[Here’s](http://www.epi.org/content.cfm/pm124) a good brief summary of the EPI proposal: > [@](#): > > With federal stimulus checks in the mail this month, it’s worth reconsidering the much-trumpeted bipartisan accord that was reached in January to jumpstart the U.S. economy – and all that it fails to do. For instance, the stimulus deal provides for no extension of unemployment benefits; no aid to cash-strapped states; and no spending on immediate repairs to schools, bridges, ports, and other crucial infrastructure. All of the above were identified by EPI as cost-effective ways to inject money into a shrinking economy, in many cases, creating good jobs in the process. They were not incorporated into the plan then, and despite far worsening economic conditions, efforts to revive the ideas have not gathered sufficient support. In fact, the latest effort toward a second stimulus package in the House, which began with talk of halting foreclosures and building infrastructure, has shrunk down to a minor extension of unemployment benefits tagged onto a supplemental appropriations bill used to fund the war in Iraq. > > The good news is that the January deal between House leaders and President Bush puts cash in the pockets of people who are likely to spend it, ratcheting down the payments for individuals who earn more than $75,000 a year. The bad news is that businesses get tax breaks worth an estimated $45 billion this year that will do nothing to get the economy moving again— **businesses need customers, not incentives to increase capacity.** If there was any doubt of recession in January, it should be gone by now, after four months of shrinking employment, a quarterly gross domestic product rate that is barely above zero, and signs of a pullback in consumer spending. > > Here is some of what needs to be done in a second stimulus package to immediately boost the economy, create jobs, and ensure against a prolonged period of economic weakness: > > **Infrastructure:** > > With thousands of bridges in need of repair, accelerated investments in road and bridge repair would create jobs today while making our transportation system safer; > A school maintenance and repair initiative would eliminate years of deferred maintenance and improve the learning conditions for students and teachers; > By putting a down payment on regional transportation projects by creating an infrastructure investment bank we can begin to meet long-term infrastructure needs. > > **Unemployment insurance:** > > With long-term unemployment at unusually high levels, extending unemployment insurance benefits would yield an immediate stimulus and protection against a longer-term economic downturn. > > **State aid:** > > States continue to project significant budget shortfalls; providing emergency aid to states would prevent cutbacks that would worsen economic conditions. > > **Expanded assistance for those most in need:** > > With higher food prices straining family budgets, an increase in national nutritional programs (including food stamp benefits) would both help those in need and effectively stimulate the economy. (Emphasis added.) ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [June 2, 2008, 5:17pm UTC](https://boards.straightdope.com/t/our-nations-economic-woes/451010/52 "2008-06-02T17:17:29Z")
[QUOTE=focusonz] It shows no such thing! The world feels obtaining stability in the region is enough of a worthwhile endeavor to loan money. [/quote] No, it shows that the world thinks US Bonds are a good enough investment to lend us the money. Bonds don’t come with what the revenue is being spent on. That some loanshark is willing to lend Johnnie money to put on the ponies doesn’t mean it’s a good idea. > [@](#): > > Yes, every day and twice on Sunday! > Shortfalls in state tax revenue always cause a reduction in state spending by fiscally responsible states. States in general focus on expanding foreign trade to increase jobs in the state and thus state taxes needed to fund these job creation programs go to reduce the trade deficit. Right. Tell me the last time someone didn’t buy a pair of shoes to teach the government a lesson. Sales tax revenues fall with a worsening economy - which has very little to do with state budgets. States are usually constitutionally mandated to have balanced budgets - not so the Feds, so a “fair” tax will do nothing to balance the budget. Not to mention that a 30% increase in the price of things will do wonders for retail sales. Yeah, theoretically it will be a wash (not so for the middle class, though) but higher prices reduces discretionary spending which means layoffs in the retail sector. I’ve heard what the representatives of retail organizations think about this - not much. While California at least does a lot of overseas sales, I have no idea of how you connect the trade deficit to state taxes. There is a bit of spending in pushing California products overseas, and the Governator makes some ads, but it is trivial. > [@](#): > > The woes are caused by an out of control and an way too powerful federal government. > Our rising national debt is due to people like Obama and Hillary and you! :rolleyes: :rolleyes: :rolleyes: Right. No Republicans involved, right? And the Clinton surplus was just an illusion? Get a clue. Republicans make deficits by making tax cuts on the promise of spending cuts which are politically impossible. > [@](#): > > Our trade deficit is due to, too low of price including taxes on imported goods. > Rising transportation fuel costs are due to inward looking budget busting federal Laws and programs. > The State of Alaska has no problem with drilling in ANWR. > The gulf states have no problem with building more refineries. > The Red states have no problem with nuclear power and wind generation. > > Your selfish and uninformed and irresponsible ‘Blue’ power has placed crippling limits on what the states can do to ameliorate the nation’s economic woes. Are you a protectionist? Are you for raising tariffs to cut imports? Look up how well that worked in 1929, would you? Rising fuel prices are due to a combination of increasing consumption, the weak dollar (thanks to Bushco incompetence) and speculation. (If the dollar had tracked the Euro gas would be $80/ bbl.) More refineries are not going to cut the price of gas nationally. ANWR drilling first of all wouldn’t make a bit of difference for years, and second is just a drop in the bucket. Improving gas mileage is a lot more effective way of reducing consumption. California is a blue state, and has no problem with wind generation. There is a huge wind farm not far from me, and there is another by Palm Springs. I’m personally for nuclear power. But being energy self sufficient would do a lot in improving our trade balance - too bad your heroes did nothing on this in 7 years, but just fought laws to reduce consumption every step of the way. Wonder why that is. ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [June 2, 2008, 9:10pm UTC](https://boards.straightdope.com/t/our-nations-economic-woes/451010/53 "2008-06-02T21:10:25Z")
[QUOTE=sweeteviljesus] BTW, has anyone else here read “Where the Money Goes”? If not, I think it’s worth a look. [/QUOTE] Can’t find that title on Amazon – do you mean, [_Where Does the Money Go?_](http://www.amazon.com/Where-Does-Money-Go-Federal/dp/0061241873/ref=pd_bbs_sr_1?ie=UTF8&s=books&qid=1212440939&sr=8-1) ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [June 2, 2008, 9:15pm UTC](https://boards.straightdope.com/t/our-nations-economic-woes/451010/54 "2008-06-02T21:15:11Z")
[QUOTE=xtisme] Do they? Why? Even if you have a magic crystal ball and can look into the future it’s going to be rather had convincing American’s that their entire way of life wrt personal transport is going away. That no alternatives exist that will enable them to continue to use personal transport as they have used it for decades. [/quote] **Enable?** No, that enables nothing. Nothing at all. [QUOTE=xtisme] No…we won’t. Oil will simply become to expensive to burn for personal transport…and possibly to politically or socially unacceptable because of it’s CO2 emissions. But we will never run out of oil. Long before oil becomes to expensive alternatives will emerge. [/quote] That what **your** crystal ball tells you? Mine tells me there is no alternative technology on the horizon that will make it possible for us to run our easy-motoring society the way we have been since WWII. ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [June 2, 2008, 9:16pm UTC](https://boards.straightdope.com/t/our-nations-economic-woes/451010/55 "2008-06-02T21:16:15Z")
[QUOTE=sweeteviljesus] Hey, let’s throw in a new wrinkle. If you want to spend money, explain where you intend to get it. [/QUOTE] Repealing W’s tax cuts would be a **start,** at least. ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [June 2, 2008, 9:19pm UTC](https://boards.straightdope.com/t/our-nations-economic-woes/451010/56 "2008-06-02T21:19:10Z")
[QUOTE=focusonz] I would not triage the woes as you don’t triage the symptom, you triage the patients, the voters and the candidates! Look at the % of those that would abstain, are disillusioned by the alternative choice! These patients are to be operated on first! [/QUOTE] 😕 That makes no sense whatsoever. What exactly were you trying to say? ---
**Author:** ![XT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/xt/32/456_2.png) [@XT](https://boards.straightdope.com/u/XT)\ **Post date:** [June 2, 2008, 9:26pm UTC](https://boards.straightdope.com/t/our-nations-economic-woes/451010/57 "2008-06-02T21:26:52Z")
[QUOTE=BrainGlutton] Enable? No, that enables nothing. Nothing at all. [/QUOTE] Really? Why? I’d say there are several alternatives that WOULD enable people to pretty much go on as they have been wrt personal transport. There are billions being poured into developing just such technologies in fact. Why do you think they won’t enable people to continue to use the system we have exactly? [QUOTE=BrainGlutton] That what your crystal ball tells you? Mine tells me there is no alternative technology on the horizon that will make it possible for us to run our easy-motoring society the way we have been since WWII. [/QUOTE] Well, frankly your’s is wrong. 😉 There is no way an alternative won’t be found…simply put there is too much money riding on it. What that technology will be I couldn’t say as there are several possibilities that COULD replace our current hydrocarbon/ICE technology. Out of curiosity, what do you base your own assessment on? Seems to me there are several technologies that are on the verge of being developed AND that could potentially compete with the current price of gas (or perhaps what gas prices will be by the time they are fully developed). My other question is…what do you think will happen if your prediction is right? We going to go back to living in caves? Going to restructure not only our personal transport infrastructure but our society as well? What is your prediction? -XT ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [June 2, 2008, 9:47pm UTC](https://boards.straightdope.com/t/our-nations-economic-woes/451010/58 "2008-06-02T21:47:40Z")
[QUOTE=xtisme] Really? Why? I’d say there are several alternatives that WOULD enable people to pretty much go on as they have been wrt personal transport. There are billions being poured into developing just such technologies in fact. Why do you think they won’t enable people to continue to use the system we have exactly? [/quote] I misread your sentence – I thought you said, “That no alternatives exist [that] will enable them to continue to use personal transport as they have used it for decades.” (Omitting the second “that.”) Which would make no sense at all. [QUOTE=xtisme] Out of curiosity, what do you base your own assessment on? Seems to me there are several technologies that are on the verge of being developed AND that could potentially compete with the current price of gas (or perhaps what gas prices will be by the time they are fully developed). [/quote] Each has something obvious wrong with it. We’ve aleady seen the problems with biofuels. An automobile has a range-before-refueling of at least 200 miles – no sedan-sized electric car yet has anywhere near a 100-mile range-before-recharging and it might be flatly impossible to get past that barrier. That alone would make the all-electric car an inadequate replacement for ICE, to say nothing of the fact that recharging a battery takes **time.** (Unless you have a modular-battery-swapout system, and I’ve seen practical objections to that raised here; it would require unvarying industrywide standardization, for one thing.) Hydrogen only works if you have a cheap way to make it in quantity, which would require a lot more nuke plants, good luck with **that.** Solar-powered cars are still no more than go-karts and probably will never be more. [QUOTE=xtisme] My other question is…what do you think will happen if your prediction is right? We going to go back to living in caves? Going to restructure not only our personal transport infrastructure but our society as well? What is your prediction? [/QUOTE] The former, perhaps, if we keep going as we’re going and put research and effort only into “solutions” that we hope won’t require any change in our daily lives. (Not actual caves, of course, but perhaps something like the world envisioned [here.](http://www.amazon.com/World-Made-James-Howard-Kunstler/dp/0871139782/ref=pd_bbs_sr_1?ie=UTF8&s=books&qid=1212443306&sr=1-1)) The latter if we put our efforts into restructuring our living arrangements, and into rail, which still requires energy and lots of it, but is at least much more energy-efficient than automotive transport. ---
**Author:** ![Kevbo](https://avatars.discourse-cdn.com/v4/letter/k/e47774/32.png) [@Kevbo](https://boards.straightdope.com/u/Kevbo)\ **Post date:** [June 2, 2008, 10:32pm UTC](https://boards.straightdope.com/t/our-nations-economic-woes/451010/59 "2008-06-02T22:32:06Z")
[QUOTE=Voyager] Tom Friedman proposed keeping gas at $4 a gallon, having a tax to make up the slack when it goes below $4, using some of the money to support low income people hurt by the high prices and the rest for energy research. [/QUOTE] Horrible idea. If the price to the consumer is fixed, the market can’t balance supply and demand. I’m for increasing fuel taxes for these aims, but this scheme pretty much gaurantees that the oil companies will get the whole $4/gallon. ---
**Author:** ![XT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/xt/32/456_2.png) [@XT](https://boards.straightdope.com/u/XT)\ **Post date:** [June 3, 2008, 4:49am UTC](https://boards.straightdope.com/t/our-nations-economic-woes/451010/60 "2008-06-03T04:49:52Z")
[QUOTE=BrainGlutton] Each has something obvious wrong with it. [/QUOTE] Untrue. Each has engineering challenges or is currently cost prohibitive when compared to cheap oil. Some are not quite ready for full scale production, some still need heavy research and development. Some have greater or lesser impacts. But afaik there are no show stoppers with any of the alternative techs currently being explored…not even bio-fuels. It’s all about trade-offs of course…but any of the top alternatives COULD replace oil in time, given a wide enough acceptance. For that matter we could simply stay with oil and develop more fuel efficient cars, develop new reserves (such as tar sands or shale oils), and just live with the consequences of global warming. I think if it comes down to a choice between taking our chances with global warming and the collapse of our society/civilization…I’m guessing we’ll pick door number 1. Obviously YMMV since you seem to see a collapse. [QUOTE=BrainGlutton] An automobile has a range-before-refueling of at least 200 miles – no sedan-sized electric car yet has anywhere near a 100-mile range-before-recharging and it might be flatly impossible to get past that barrier. [/QUOTE] Well, the Tesla does something like 200-230 miles on a charge IIRC. True, it’s not a ‘sedan-sized electric car’…but it’s also targeting the sports car market. There is a lot of development going on toward all electric cars. However, even if they can’t solve the problems of more charge in a lighter battery there are always hybrids. Hydrogen or Methane spring to mind as potential technologies to couple with battery for a hybrid vehicle. [QUOTE=BrainGlutton] That alone would make the all-electric car an inadequate replacement for ICE, to say nothing of the fact that recharging a battery takes time. [/QUOTE] Maybe so…and maybe no. As I said, there is a lot of development going on in battery technology and it’s hard to say what will or won’t be possible. It’s one of the reasons I don’t want to see the government pour a lot of money at any one technology as we don’t KNOW what will be the optimal solution in the end. I think it’s a pretty good bet though that something will come along to supersede the ICE and burning hydrocarbons. [QUOTE=BrainGlutton] Hydrogen only works if you have a cheap way to make it in quantity, which would require a lot more nuke plants, good luck with that. [/QUOTE] Making hydrogen in quantity isn’t all that hard, and as for cheap…it’s as cheap as whatever we are using for energy. The main drawback to hydrogen I think is it’s corrosive nature and creating a hydrogen infrastructure. Again though, there are no real show stoppers to going to hydrogen…just engineering and logistics. Personally I think hydrogen is definitely in the running for a replacement technology, especially coupled with nuclear power. Or perhaps we’ll use methane instead as there are vast reserves of that world wide (MUCH greater reserves of methane than oil ever had). [QUOTE=BrainGlutton] Solar-powered cars are still no more than go-karts and probably will never be more. [/QUOTE] Again, there is a lot of development going on in solar and some key breakthroughs have been made in recent years in making the cells smaller, lighter and cheaper. Perhaps you would get a hybrid vehicle with printed solar cells embedded in the paint of your car, coupled with high performance battery technology, or a combination of solar, battery and fuel cell. I think you are dismissing these technologies because they aren’t ready for prime time today. Myself, I think any one of these technologies has the potential to be the next personal transport energy source given time and effort. We are on the cusp of several of these technologies being developed enough to produce and actually compete with the rising price of oil. [QUOTE=BrainGlutton] The former, perhaps, if we keep going as we’re going and put research and effort only into “solutions” that we hope won’t require any change in our daily lives. (Not actual caves, of course, but perhaps something like the world envisioned here.) The latter if we put our efforts into restructuring our living arrangements, and into rail, which still requires energy and lots of it, but is at least much more energy-efficient than automotive transport. [/QUOTE] Well, you can dream I suppose. But IMHO it ain’t gona happen. We won’t be radically restructuring out entire society, we won’t be creating vast HSR systems…and we won’t be moving back into caves. You hand wave away ‘solutions’…but companies are spending billions of dollars on researching and developing those ‘solutions’, and several of them are close to being ready for prime time. There are hundreds of billions of dollars at stake in bringing that new technology to market and becoming the replacement for the ICE/hydrocarbon…and my bet is on people developing that replacement tech, solving the engineering problems and bringing it to market for just that reason. -XT [Previous page](https://boards.straightdope.com/t/our-nations-economic-woes/451010.md?page=2) [Next page](https://boards.straightdope.com/t/our-nations-economic-woes/451010.md?page=4)